Geopolitical Tensions Make No Signs of Stabilizing

29 April 2011 29 April 2011

BonTrade

Oil prices remained soft in European session as investors took profits after recent rally. The front-month contact for WTI crude oil slipped to 112.3, after rising to a new 31-month high of 113.97. Brent crude fell for the second day with price hovering below 125 for most of the time. The spread between WTI and Brent crude has been moving around 11/12 over the past week. Apart from profit-taking, the market has also been unsettled by slower US growth in the first quarter, worrying about dampening effects on oil demand. The IMF, the IEA and some commentators have warned than high oil prices will deteriorate economic growth and weakened growth will in turns hurt oil demand. The negative impacts of high oil prices might have begun as it's reported that the OPEC will cut exports by -1.2% the 4 weeks to May 14 because of a seasonal decline in demand